Long-Term Care Pharmacy Joint Venture May Violate Anti-Kickback Laws: OIG Issues Advisory Opinion 11-03

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On April 14, 2011, the U.S. Department of Health and Human Services Office of Inspector General (OIG) posted OIG Advisory Opinion No. 11-03, concluding that a pharmacy employee's joint ownership of a long-term care pharmacy with long-term care facility owners may generate kickbacks in violation of the federal anti-kickback statute.

In the proposed arrangement, the sponsoring pharmacy would be a long-term care pharmacy providing products and services to skilled nursing facilities, intermediate care facilities, assisted-living facilities and residential care facilities. The sponsoring pharmacy's employee would create a joint venture with one or more of the sponsoring pharmacy's long-term care facility owner customers ("Facility Owners") to own a new long-term care pharmacy. The Facility Owners would each receive shares in proportion to their capital investments. The employee would also receive shares for a nominal price, and the new long-term care pharmacy would pay dividends and distributions in proportion to ownership.

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